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The Beacon Hill Report - April 17, 2014

Date: April 16, 2014

Legislative Relations Warming; UI Rate Freeze Passes

Despite a continuing impasse between the House and the Senate over the proper form of legislation to increase the minimum wage and change the unemployment insurance system, the House and Senate have agreed to enact a freeze on unemployment insurance rates for 2014. The Governor had previously delayed the due date for UI taxes from the end of April to the end of May. When enacted, the freeze will mean that the average tax will not increase by $260 from $680 to $940 per employee per year and a $500 million tax increase on MA employers will be avoided.

It is important to note that, even with a rate freeze, some companies due to circumstances unique to the particular company may experience an increase in unemployment taxes.    

The Patrick administration began the process of ending its contract with the company that built the Obamacare website for Massachusetts. More importantly for those small businesses and individuals seeking coverage through the MA Health Connector, the earliest date for a fully functioning website for the state exchange is now October 2014 – a full one year from the originally intended date. Although a final decision has not been made, the administration appears to have chosen a middle path of rebuilding the site with a new vendor and/or using a more successful website from another state instead of either scrapping the website and starting from scratch or working with the original vendor to make repairs. The costs to taxpayers are mounting rapidly. Beyond the millions of state dollars wasted on a faulty website design and the spending of a $180 million federal grant and the forfeiting of additional federal money due to the non-functioning system, tens of thousands of people are now receiving health care coverage from the state with the taxpayers picking up the entire cost at least through June and probably longer.

The Pioneer Institute has issued one hundred questions about the website, the funding for the website, the knowledge of the website’s problems, the failure of the state to respond to the issues in a timely fashion, and how best to proceed. The fact that, prior to this fiasco, the Commonwealth of Massachusetts had a functioning system that insured 98% or more of the state’s population only adds to the frustration and to the questions.    

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